The protracted conflict in the Middle East could worsen market sentiment, increase inflationary pressures, and slow economic growth, said International Monetary Fund Managing Director Kristalina Georgieva, speaking at a symposium organized by the Japanese Ministry of Finance.
According to her, in the new global environment, authorities should “think about the unthinkable and prepare for it.” Georgieva noted that the global economy is once again being tested for resilience due to the new conflict in the region.
According to the IMF chief, if oil prices remain 10% higher for most of the year, this could add about 0.4 percentage points to global inflation.
Against this backdrop, oil prices rose more than 25% on Monday, reaching their highest level since mid-2022. Rising energy prices are fueling fears of a new round of inflation and a slowdown in global economic activity, as well as complicating the scope for further monetary policy easing by leading central banks.
